COLORADO REVISED STATUTES 2011

Transcription

1 COLORADO REVISED STATUTES 2011 TITLE 7 LABOR AND INDUSTRY ARTICLE 121 General Provisions PART 1 SHORT TITLE AND RESERVATION OF POWER Short title. Articles 121 to 137 of this title shall be known and may be cited as the "Colorado Revised Nonprofit Corporation Act" Reservation of power to amend or repeal. The general assembly has the power to amend or repeal all or part of articles 121 to 137 of this title at any time and all domestic and foreign nonprofit corporations subject to said articles shall be governed by the amendment or repeal. PART 2 FILING DOCUMENTS Filing requirements. Part 3 of article 90 of this title, providing for the filing of documents, applies to any document filed or to be filed by the secretary of state pursuant to articles 121 to 137 of this title. PART 3 SECRETARY OF STATE Powers - repeal. (Repealed) PART 4 DEFINITIONS General definitions. As used in articles 121 to 137 of this title, unless the context otherwise requires: (1) (Deleted by amendment, L. 2003, p. 2332, 280, effective July 1, 2004.) (2) "Articles of incorporation" includes amended articles of incorporation, restated articles of incorporation, and other instruments, however designated, on file in the records -1-

2 of the secretary of state that have the effect of amending or supplementing in some respect the original or amended articles of incorporation, and shall also include: (a) For a corporation created by special act of the general assembly or pursuant to general law, which corporation has elected to accept the provisions of articles 121 to 137 of this title, the special charter and any amendments thereto made by special act of the general assembly or pursuant to general law prior to the corporation's election to accept the provisions of said articles; (b) For a corporation formed or incorporated under article 40, 50, or 51 of this title, which corporation has elected to accept the provisions of articles 121 to 137 of this title, the certificate of incorporation or affidavit and any amendments thereto made prior to the corporation's election to accept the provisions of said articles. (3) (Deleted by amendment, L. 2003, p. 2332, 280, effective July 1, 2004.) (4) "Board of directors" means the body authorized to manage the affairs of the domestic or foreign nonprofit corporation; except that no person or group of persons are the board of directors because of powers delegated to that person or group of persons pursuant to section (2). (5) "Bylaws" means the code or codes of rules, other than the articles of incorporation, adopted pursuant to articles 121 to 137 of this title for the regulation or management of the affairs of the domestic or foreign nonprofit corporation irrespective of the name or names by which such rules are designated, and includes amended bylaws and restated bylaws. (6) "Cash" and "money" are used interchangeably in articles 121 to 137 of this title. Each of these terms includes: (a) Legal tender; (b) Negotiable instruments readily convertible into legal tender; and (c) Other cash equivalents readily convertible into legal tender. (7) "Class" refers to a group of memberships that have the same rights with respect to voting, dissolution, redemption, and transfer. For the purpose of this section, rights shall be considered the same if they are determined by a formula applied uniformly to a group of memberships. (8) (Deleted by amendment, L. 2000, p. 982, 76, effective July 1, 2000.) (9) "Corporation" or "domestic corporation" means a corporation for profit, which is not a foreign corporation, incorporated under or subject to the provisions of articles 101 to 117 of this title. (10) "Delegate" means any person elected or appointed to vote in a representative assembly for the election of a director or directors or on other matters. (11) (Deleted by amendment, L. 2003, p. 2332, 280, effective July 1, 2004.) (12) "Director" means a member of the board of directors. (13) "Distribution" means the payment of a dividend or any part of the income or profit of a corporation to its members, directors, or officers. (14) (Deleted by amendment, L. 2003, p. 2332, 280, effective July 1, 2004.) (15) "Effective date of notice" has the meaning set forth in section

3 (16) "Employee" includes an officer but not a director; except that a director may accept duties that make said director also an employee. (16.5) "Entrance fee" means any fee or charge, including a damage deposit, paid by a person to a residential nonprofit corporation in order to become a resident member. "Entrance fee" does not include regular periodic payments for the purchase or lease of residential real estate or for the day-to-day use of facilities or services. (17) to (20) (Deleted by amendment, L. 2003, p. 2332, 280, effective July 1, 2004.) (21) "Internal revenue code" means the federal "Internal Revenue Code of 1986", as amended from time to time, or to corresponding provisions of subsequent internal revenue laws of the United States of America. (22) and (23) (Deleted by amendment, L. 2003, p. 2332, 280, effective July 1, 2004.) (24) "Member" means any person or persons identified as such in the articles of incorporation or bylaws pursuant to a procedure stated in the articles of incorporation or bylaws or by a resolution of the board of directors. The term "member" includes "voting member" and a stockholder in a cooperative housing corporation formed pursuant to section , C.R.S. (25) "Membership" refers to the rights and obligations of a member or members. (25.5) "Mutual ditch company" means a nonprofit corporation that complies with article 42 of this title. (26) "Nonprofit corporation" or "domestic nonprofit corporation" means an entity, which is not a foreign nonprofit corporation, incorporated under or subject to the provisions of articles 121 to 137 of this title. (27) to (29) (Deleted by amendment, L. 2003, p. 2332, 280, effective July 1, 2004.) (30) "Receive", when used in reference to receipt of a writing or other document by a domestic or foreign nonprofit corporation, means that the writing or other document is actually received: (a) By the domestic or foreign nonprofit corporation at its registered office or at its principal office; (b) By the secretary of the domestic or foreign nonprofit corporation, wherever the secretary is found; or (c) By any other person authorized by the bylaws or the board of directors to receive such writings, wherever such person is found. (31) "Record date" means the date, established under article 127 of this title, on which a nonprofit corporation determines the identity of its members. The determination shall be made as of the close of business on the record date unless another time for doing so is stated when the record date is fixed. (32) (Deleted by amendment, L. 2003, p. 2332, 280, effective July 1, 2004.) (32.5) "Residential member" means a member of a residential nonprofit corporation whose status as a member is dependent upon, or whose membership is -3-

4 accorded voting rights as a result of, owning or leasing specified residential real estate. (33) (Deleted by amendment, L. 2003, p. 2332, 280, effective July 1, 2004.) (33.5) (a) Except as otherwise provided in paragraph (b) of this subsection (33.5), "residential nonprofit corporation" means a nonprofit corporation that has residential members. (b) Notwithstanding paragraph (a) of this subsection (33.5), "residential nonprofit corporation" does not include: (I) A unit owners' association or any other entity subject to the "Colorado Common Interest Ownership Act", article 33.3 of title 38, C.R.S., regardless of whether it was formed before, on, or after July 1, 1992; (II) A nursing care facility licensed by the department of public health and environment under section , C.R.S.; (III) An assisted living residence licensed under section , C.R.S.; (IV) A life care institution regulated under article 13 of title 12, C.R.S.; or (V) A continuing care retirement community, as described in section , C.R.S., operated by an entity that is licensed or otherwise subject to state regulation. (34) "Secretary" means the corporate officer to whom the bylaws or the board of directors has delegated responsibility under section (3) for the preparation and maintenance of minutes of the meetings of the board of directors and of the members and of the other records and information required to be kept by the nonprofit corporation under section and for authenticating records of the nonprofit corporation. (35) to (37) (Deleted by amendment, L. 2003, p. 2332, 280, effective July 1, 2004.) (38) "Vote" includes authorization by written ballot and written consent. (39) "Voting group" means all the members of one or more classes of members or directors that, under articles 121 to 137 of this title or the articles of incorporation or bylaws, are entitled to vote and be counted together collectively on a matter. All members or directors entitled by articles 121 to 137 of this title or the articles of incorporation or bylaws to vote generally on the matter are for that purpose a single voting group. (40) "Voting member" means any person or persons who on more than one occasion, pursuant to a provision of a nonprofit corporation's articles of incorporation or bylaws, have the right to vote for the election of a director or directors. A person is not a voting member solely by virtue of any of the following: (a) Any rights such person has as a delegate; (b) Any rights such person has to designate a director or directors; or (c) Any rights such person has as a director Notice. (1) Notice given pursuant to articles 121 to 137 of this title shall be in writing unless otherwise provided in the bylaws. (2) Notice may be given in person; by telephone, telegraph, teletype, electronically transmitted, or other form of wire or wireless communication; or by mail or private carrier. The bylaws may provide that if these forms of personal notice are impracticable, notice may be communicated by a newspaper of general circulation in the area where -4-

5 published. (3) Written notice by a nonprofit corporation to its members, if mailed, is correctly addressed if addressed to the member's address shown in the nonprofit corporation's current record of members. If three successive notices given to a member pursuant to subsection (5) of this section have been returned as undeliverable, no further notices to such member shall be necessary until another address for the member is made known to the nonprofit corporation. (4) Written notice to a domestic nonprofit corporation or to a foreign nonprofit corporation authorized to transact business or conduct activities in this state, other than in its capacity as a member, is correctly addressed if addressed to the registered agent address of its registered agent or to the domestic or foreign nonprofit corporation or its secretary at its principal office. (5) Written notice by a nonprofit corporation to its members, if in a comprehensible form, is effective at the earliest of: (a) The date received; (b) Five days after its deposit in the United States mail, as evidenced by the postmark, if mailed correctly addressed and with first class postage affixed; (c) The date shown on the return receipt, if mailed by registered or certified mail, return receipt requested, and the receipt is signed by or on behalf of the addressee; (d) Thirty days after its deposit in the United States mail, as evidenced by the postmark, if mailed correctly addressed and with other than first class, registered, or certified postage affixed. (6) Oral notice is effective when communicated if communicated in a comprehensible manner. (7) Notice by publication is effective on the date of first publication. (8) If articles 121 to 137 of this title prescribe notice requirements for particular circumstances, those requirements govern. If the articles of incorporation or bylaws prescribe notice requirements not inconsistent with this section or other provisions of articles 121 to 137 of this title, those requirements govern. (9) A written notice or report delivered as part of a newsletter, magazine, or other publication regularly sent to members shall constitute a written notice or report if addressed or delivered to the member's address shown in the nonprofit corporation's current list of members, or in the case of members who are residents of the same household and who have the same address in the nonprofit corporation's current list of members, if addressed or delivered to one of such members, at the address appearing on the current list of members. PART 5 PRIVATE FOUNDATIONS Private foundations. (1) Except where otherwise determined by a court of competent jurisdiction, a nonprofit corporation that is a private foundation as -5-

6 defined in section 509 (a) of the internal revenue code: (a) Shall distribute such amounts for each taxable year at such time and in such manner as not to subject the nonprofit corporation to tax under section 4942 of the internal revenue code; (b) Shall not engage in any act of self-dealing as defined in section 4941 (d) of the internal revenue code; (c) Shall not retain any excess business holdings as defined in section 4943 (c) of the internal revenue code; (d) Shall not make any investments that would subject the nonprofit corporation to taxation under section 4944 of the internal revenue code; (e) Shall not make any taxable expenditures as defined in section 4945 (d) of the internal revenue code. PART 6 JUDICIAL RELIEF Judicial relief. (1) If for any reason it is impractical or impossible for any nonprofit corporation to call or conduct a meeting of its members, delegates, or directors, or otherwise obtain their consent, in the manner prescribed by articles 121 to 137 of this title, its articles of incorporation, or bylaws, then upon petition of a director, officer, delegate, or member the district court for the county in this state in which the street address of the nonprofit corporation's principal office is located, or if the nonprofit corporation has no principal office in this state, the district court for the county in which the street address of its registered agent is located, or if the nonprofit corporation has no registered agent, the district court for the city and county of Denver, may order that such a meeting be called or that a written consent or other form of obtaining the vote of members, delegates, or directors be authorized, in such a manner as the court finds fair and equitable under the circumstances. (2) The court shall, in an order issued pursuant to this section, provide for a method of notice reasonably designed to give actual notice to all persons who would be entitled to notice of a meeting held pursuant to articles 121 to 137 of this title, the articles of incorporation, or bylaws and whether or not the method results in actual notice to all such persons or conforms to the notice requirements that would otherwise apply. In a proceeding under this section, the court may determine who the members or directors are. (3) The order issued pursuant to this section may dispense with any requirement relating to the holding of or voting at meetings or obtaining votes, including any requirement as to quorums or as to the number or percentage of votes needed for approval, that would otherwise be imposed by articles 121 to 137 of this title, the articles of incorporation, or bylaws. (4) Whenever practical, any order issued pursuant to this section shall limit the subject matter of meetings or other forms of consent authorized to items, including amendments to the articles of incorporation or bylaws, the resolution of which will or -6-

7 may enable the nonprofit corporation to continue managing its affairs without further resort to this section; except that an order under this section may also authorize the obtaining of whatever votes and approvals are necessary for the dissolution, merger, or sale of assets. (5) Any meeting or other method of obtaining the vote of members, delegates, or directors conducted pursuant to an order issued under this section and that complies with all the provisions of such order is for all purposes a valid meeting or vote, as the case may be, and shall have the same force and effect as if it complied with every requirement imposed by articles 121 to 137 of this title, the articles of incorporation, or bylaws. (6) Court ordered meetings may also be held pursuant to section ARTICLE 122 Incorporation Incorporators. One or more persons may act as the incorporator or incorporators of a nonprofit corporation by delivering articles of incorporation to the secretary of state for filing pursuant to part 3 of article 90 of this title. An incorporator who is an individual shall be eighteen years of age or older Articles of incorporation. (1) The articles of incorporation shall state: (a) The domestic entity name for the nonprofit corporation, which domestic entity name shall comply with part 6 of article 90 of this title; (b) The registered agent name and registered agent address of the nonprofit corporation's initial registered agent; (c) The principal office address of the nonprofit corporation's initial principal office; (d) The true name and mailing address of each incorporator; (e) Whether or not the nonprofit corporation will have voting members; and (f) Repealed. (g) Provisions not inconsistent with law regarding the distribution of assets on dissolution. (2) The articles of incorporation may but need not state: (a) The names and addresses of the individuals who are elected to serve as the initial directors; (b) Provisions not inconsistent with law regarding: (I) The purpose or purposes for which the nonprofit corporation is incorporated; (II) Managing and regulating the affairs of the nonprofit corporation; (III) Defining, limiting, and regulating the powers of the nonprofit corporation, its board of directors, and its members, or any class of members; and (IV) Whether cumulative voting will be permitted; (c) Any provision that under articles 121 to 137 of this title is required or permitted to be stated in the bylaws; -7-

8 (d) The characteristics, qualifications, rights, limitations, and obligations attaching to each or any class of members. (3) The articles of incorporation need not state any of the corporate powers enumerated in articles 121 to 137 of this title. (4) If articles 121 to 137 of this title condition any matter upon the presence of a provision in the bylaws, the condition is satisfied if such provision is present either in the articles of incorporation or the bylaws. If articles 121 to 137 of this title condition any matter upon the absence of a provision in the bylaws, the condition is satisfied only if the provision is absent from both the articles of incorporation and the bylaws Incorporation. (1) A nonprofit corporation is incorporated when the articles of incorporation are filed by the secretary of state or, if a delayed effective date is stated pursuant to section in the articles of incorporation as filed by the secretary of state and if a statement of change revoking the articles of incorporation is not filed before such effective date, on such delayed effective date. The corporate existence begins upon incorporation. (2) The secretary of state's filing of the articles of incorporation is conclusive that all conditions precedent to incorporation have been met Unauthorized assumption of corporate powers. All persons purporting to act as or on behalf of a nonprofit corporation without authority to do so and without good faith belief that they have such authority shall be jointly and severally liable for all liabilities incurred or arising as a result thereof Organization of nonprofit corporation. (1) After incorporation: (a) If initial directors are not named in the articles of incorporation, the incorporators shall hold a meeting, at the call of a majority of the incorporators, to adopt initial bylaws, if desired, and to elect a board of directors; and (b) If initial directors are named in the articles of incorporation, the initial directors shall hold a meeting, at the call of a majority of the directors, to adopt bylaws, if desired, to appoint officers, and to carry on any other business. (2) Action required or permitted by articles 121 to 137 of this title to be taken by incorporators at an organizational meeting may be taken without a meeting if the action is taken in the manner provided in section for action by directors without a meeting. (3) An organizational meeting may be held in or out of this state Bylaws. (1) The board of directors or, if no directors have been named or elected, the incorporators may adopt initial bylaws. If neither the incorporators nor the board of directors have adopted initial bylaws, the members may do so. (2) The bylaws of a nonprofit corporation may contain any provision for managing and regulating the affairs of the nonprofit corporation that is not inconsistent with law or with the articles of incorporation Emergency bylaws. (1) Unless otherwise provided in the articles of incorporation, the board of directors may adopt bylaws to be effective only in an emergency as defined in subsection (4) of this section. The emergency bylaws, which are -8-

9 subject to amendment or repeal by the members, may include all provisions necessary for managing the nonprofit corporation during the emergency, including: (a) Procedures for calling a meeting of the board of directors; (b) Quorum requirements for the meeting; and (c) Designation of additional or substitute directors. (2) All provisions of the regular bylaws consistent with the emergency bylaws shall remain in effect during the emergency. The emergency bylaws shall not be effective after the emergency ends. (3) Corporate action taken in good faith in accordance with the emergency bylaws: (a) Binds the nonprofit corporation; and (b) May not be the basis for imposition of liability on any director, officer, employee, or agent of the nonprofit corporation on the ground that the action was not authorized corporate action. (4) An emergency exists for the purposes of this section if a quorum of the directors cannot readily be obtained because of some catastrophic event. ARTICLE 123 Purposes and Powers Purposes and applicability. (1) Every nonprofit corporation incorporated under articles 121 to 137 of this title has the purpose of engaging in any lawful business or activity unless a more limited purpose is stated in the articles of incorporation. (2) Where another statute of this state requires that corporations of a particular class be formed or incorporated exclusively under that statute, corporations of that class shall be formed or incorporated under such other statute. The corporation shall be subject to all limitations of the other statute. (3) Where another statute of this state requires nonprofit corporations of a particular class to be formed or incorporated under that statute and also under general nonprofit corporation statutes, such nonprofit corporations shall be formed or incorporated under such other statute and, in addition thereto, under articles 121 to 137 of this title to the extent general nonprofit corporation law is applicable. (4) Where another statute of this state permits nonprofit corporations of a particular class to be formed or incorporated either under that statute or under the general nonprofit corporation statutes, a nonprofit corporation of that class may at the election of its incorporators be formed or incorporated under articles 121 to 137 of this title. Unless the articles of incorporation of a nonprofit corporation indicate that it is formed or incorporated under another statute, the nonprofit corporation shall for all purposes be considered as formed and incorporated under articles 121 to 137 of this title. (5) Articles 121 to 137 of this title shall apply to nonprofit corporations of every class, whether or not included in the term "nonprofit corporation" as defined in section

10 (26), that are formed or incorporated under and governed by other statutes of this state to the extent that said articles are not inconsistent with such other statutes. (6) Articles 121 to 137 of this title shall apply to any nonprofit corporation formed prior to January 1, 1968, under article 40 or 50 of this title without shares or capital stock and for a purpose for which a nonprofit corporation might be formed under articles 121 to 137 of this title and that elects to accept said articles as provided therein. (7) Articles 121 to 137 of this title shall apply to any corporation having shares or capital stock and formed under article 40, 50, or 51 of this title, and each nonprofit corporation whether with or without shares or capital stock formed prior to January 1, 1968, under general law or created by special act of the general assembly for a purpose for which a nonprofit corporation may be formed under articles 121 to 137 of this title, but not otherwise entitled to the rights, privileges, immunities, and franchises provided by said articles that elects to accept said articles as provided therein. (8) A mutual ditch company may elect by a statement in its articles of incorporation that one or more of the provisions of the "Colorado Business Corporation Act", articles 101 to 117 of this title, apply to the mutual ditch company in lieu of one or more of the provisions of articles 121 to 137 of this title General powers. (1) Unless otherwise provided in the articles of incorporation, every nonprofit corporation has perpetual duration and succession in its domestic entity name and has the same powers as an individual to do all things necessary or convenient to carry out its affairs, including the power: (a) To sue and be sued, complain, and defend in its name; (b) To have a corporate seal, which may be altered at will, and to use such seal, or a facsimile thereof, including a rubber stamp, by impressing or affixing it or by reproducing it in any other manner; (c) To make and amend bylaws; (d) To purchase, receive, lease, and otherwise acquire, and to own, hold, improve, use, and otherwise deal with, real or personal property or any legal or equitable interest in property, wherever located; (e) To sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of all or any part of its property; (f) To purchase, receive, subscribe for, and otherwise acquire shares and other interests in, and obligations of, any other entity; and to own, hold, vote, use, sell, mortgage, lend, pledge, and otherwise dispose of, and deal in and with, the same; (g) To make contracts and guarantees, incur liabilities, borrow money, issue notes, bonds, and other obligations, and secure any of its obligations by mortgage or pledge of any of its property, franchises, or income; (h) To lend money, invest and reinvest its funds, and receive and hold real and personal property as security for repayment; except that a nonprofit corporation may not lend money to or guarantee the obligation of a director or officer of the nonprofit corporation; (i) To be an agent, an associate, a fiduciary, a manager, a member, a partner, a -10-

11 promoter, or a trustee of, or to hold any similar position with, any entity; (j) To conduct its activities, locate offices, and exercise the powers granted by articles 121 to 137 of this title within or without this state; (k) To elect or appoint directors, officers, employees, and agents of the nonprofit corporation, define their duties, and fix their compensation; (l) To pay pensions and establish pension plans, pension trusts, profit sharing plans, and other benefit or incentive plans for any of its current or former directors, officers, employees, and agents; (m) To make donations for the public welfare or for charitable, religious, scientific, or educational purposes and for other purposes that further the corporate interest; (n) To impose dues, assessments, admission, and transfer fees upon its members; (o) To establish conditions for admission of members, admit members, and issue or transfer memberships; (p) To carry on a business; (q) To make payments or donations and to do any other act, not inconsistent with law, that furthers the affairs of the nonprofit corporation; (r) To indemnify current or former directors, officers, employees, fiduciaries, or agents as provided in article 129 of this title; (s) To limit the liability of its directors as provided in section (1); and (t) To cease its corporate activities and dissolve. (2) Unless permitted by another statute of this state or otherwise permitted pursuant to section (5), (7), or , a nonprofit corporation shall not authorize or issue shares of stock Emergency powers. (1) In anticipation of or during an emergency defined in subsection (4) of this section, the board of directors may: (a) Modify lines of succession to accommodate the incapacity of any director, officer, employee, or agent; and (b) Relocate the principal office or designate additional offices, or authorize officers to do so. (2) During an emergency as contemplated in subsection (4) of this section, unless emergency bylaws provide otherwise: (a) Notice of a meeting of the board of directors need be given only to those directors whom it is practicable to reach and may be given in any practicable manner, including by publication or radio; and (b) One or more officers of the nonprofit corporation present at a meeting of the board of directors may be deemed to be directors for the meeting, in order of rank and within the same rank in order of seniority, as necessary to achieve a quorum. (3) Corporate action taken in good faith during an emergency under this section to further the ordinary business affairs of the nonprofit corporation: (a) Binds the nonprofit corporation; and (b) May not be the basis for the imposition of liability on any director, officer, -11-

12 employee, or agent of the nonprofit corporation on the ground that the action was not authorized corporate action. (4) An emergency exists for purposes of this section if a quorum of the directors cannot readily be obtained because of some catastrophic event Ultra vires. (1) Except as provided in subsection (2) of this section, the validity of corporate action may not be challenged on the ground that the nonprofit corporation lacks or lacked power to act. (2) A nonprofit corporation's power to act may be challenged: (a) In a proceeding against the nonprofit corporation to enjoin the act. The proceeding may be brought by a director or by a voting member or voting members in a derivative proceeding. (b) In a proceeding by or in the right of the nonprofit corporation, whether directly, derivatively, or through a receiver, trustee, or other legal representative, against an incumbent or former director, officer, employee, or agent of the nonprofit corporation; or (c) In a proceeding by the attorney general under section (3) In a proceeding under paragraph (a) of subsection (2) of this section to enjoin an unauthorized corporate act, the court may enjoin or set aside the act, if it would be equitable to do so and if all affected persons are parties to the proceeding, and may award damages for loss, including anticipated profits, suffered by the nonprofit corporation or another party because of the injunction Actions against nonprofit corporations. Any other provision of law to the contrary notwithstanding, any civil action permitted under the law of this state may be brought against any nonprofit corporation, and the assets of any nonprofit corporation that would, but for articles 121 to 137 of this title, be immune from levy and execution on any judgment shall nonetheless be subject to levy and execution to the extent that such nonprofit corporation would be reimbursed by proceeds of liability insurance policies carried by it were judgment levied and executed against its assets. ARTICLE 124 Name Corporate name. (Repealed) Reserved name. (Repealed) ARTICLE 125 Office and Agent Registered office and registered agent. Part 7 of article 90 of this title, providing for registered agents and service of process, applies to nonprofit corporations incorporated under or subject to articles 121 to 137 of this title. -12-

13 ARTICLE 126 Members and Memberships PART 1 ADMISSION OF MEMBERS AND LIABILITY TO THIRD PARTIES No requirement of members. A nonprofit corporation is not required to have members Admission. (1) The bylaws may establish criteria or procedures for admission of members. (2) No person shall be admitted as a member without such person's consent. (3) A nonprofit corporation may issue certificates evidencing membership therein Liability to third parties. The directors, officers, employees, and members of a nonprofit corporation are not, as such, personally liable for the acts, debts, liabilities, or obligations of a nonprofit corporation Consideration. Unless otherwise provided by the bylaws, a nonprofit corporation may admit members for no consideration or for such consideration as is determined by the board of directors. PART 2 TYPES OF MEMBERSHIPS - MEMBERS' RIGHTS AND OBLIGATIONS Differences in rights and obligations of members. (1) Unless otherwise provided by articles 121 to 137 of this title or the bylaws: (a) All voting members shall have the same rights and obligations with respect to voting and all other matters that articles 121 to 137 of this title specifically reserve to voting members; and (b) With respect to matters not so reserved, all members, including voting members, shall have the same rights and obligations Transfers. (1) Unless otherwise provided by the bylaws, no member of a nonprofit corporation may transfer a membership or any right arising therefrom. (2) Where transfer rights have been provided, no restriction on them shall be binding with respect to a member holding a membership issued prior to the adoption of the restriction unless the restriction is approved by the affected member Creditor's action against member. No proceeding may be brought by a creditor to reach the liability, if any, of a member to the nonprofit corporation unless final judgment has been rendered in favor of the creditor against the nonprofit corporation and execution has been returned unsatisfied in whole or in part or unless such proceeding would be useless. -13-

14 PART 3 RESIGNATION AND TERMINATION Resignation. (1) Unless otherwise provided by the bylaws, a member may resign at any time. (2) The resignation of a member does not relieve the member from any obligations the member may have to the nonprofit corporation as a result of obligations incurred or commitments made prior to resignation Termination, expulsion, or suspension. (1) Unless otherwise provided by the bylaws, no member of a nonprofit corporation may be expelled or suspended, and no membership or memberships in such nonprofit corporation may be terminated or suspended except pursuant to a procedure that is fair and reasonable and is carried out in good faith. (2) For purposes of this section, a procedure is fair and reasonable when either: (a) The bylaws or a written policy of the board of directors state a procedure that provides: (I) Not less than fifteen days prior written notice of the expulsion, suspension, or termination and the reasons therefor; and (II) An opportunity for the member to be heard, orally or in writing, not less than five days before the effective date of the expulsion, suspension, or termination by a person or persons authorized to decide that the proposed expulsion, termination, or suspension not take place; or (b) It is fair and reasonable taking into consideration all of the relevant facts and circumstances. (3) For purposes of this section, any written notice given by mail must be given by first-class or certified mail sent to the last address of the member shown on the nonprofit corporation's records. (4) Unless otherwise provided by the bylaws, any proceeding challenging an expulsion, suspension, or termination, including a proceeding in which defective notice is alleged, must be commenced within one year after the effective date of the expulsion, suspension, or termination. (5) Unless otherwise provided by the bylaws, a member who has been expelled or suspended may be liable to the nonprofit corporation for dues, assessments, or fees as a result of obligations incurred or commitments made prior to expulsion or suspension Purchase of memberships. Unless otherwise provided by the bylaws, a nonprofit corporation shall not purchase the membership of a member who resigns or whose membership is terminated. If so authorized, a nonprofit corporation may purchase the membership of a member who resigns or whose membership is terminated for the amount and pursuant to the conditions stated in or authorized by its bylaws. No payment shall be made in violation of article 133 of this title Residential membership - return of consideration - cessation of periodic payments - time limits - effective date - repeal. (1) Notwithstanding any -14-

15 provision of the articles of incorporation or bylaws to the contrary: (a) (I) A residential nonprofit corporation shall refund the entrance fee of a residential member to the member or his or her heirs within ninety days after the member's resignation, termination, expulsion, or suspension from the corporation or the transfer of the residential membership. (II) (A) This paragraph (a) applies only to contracts entered into on or after March 11, (B) This subparagraph (II) is repealed, effective April 1, (b) If the membership of a residential member is terminated due to the member's death or for any other reason beyond the member's control, the member or his or her heirs are not liable for any periodic payments coming due more than thirty days after the effective date of the termination. PART 4 DERIVATIVE SUITS Derivative suits. (1) Without affecting the right of a member or director to bring a proceeding against a nonprofit corporation or its officers or directors, a proceeding may be brought in the right of a nonprofit corporation to procure a judgment in its favor by: (a) Any voting member or voting members having five percent or more of the voting power; or (b) Any director. (2) In any such proceeding, each complainant shall be a voting member or director at the time of bringing the proceeding. (3) A complaint in a proceeding brought in the right of a nonprofit corporation must be verified and allege with particularity the demand made, if any, to obtain action by the directors and either why the complainants could not obtain the action or why they did not make the demand. If a demand for action was made and the nonprofit corporation's investigation of the demand is in progress when the proceeding is filed, the court may stay the suit until the investigation is completed. (4) In any action instituted in the right of a nonprofit corporation by one or more voting members, the court having jurisdiction over the matter may, at any time before final judgment, require the plaintiff to give security for the costs and reasonable expenses that may be directly attributable to and incurred by the nonprofit corporation in the defense of such action or may be incurred by other parties named as defendant for which the nonprofit corporation may become legally liable, but not including fees of attorneys. The amount of such security may from time to time be increased or decreased, in the discretion of the court, upon showing that the security provided has or may become inadequate or is excessive. If the court finds that the action was commenced without reasonable cause, the nonprofit corporation shall have recourse to such security in such amount as the court shall determine upon the termination of such action. -15-

16 (5) No action shall be commenced in this state by a member of a foreign nonprofit corporation in the right of a foreign nonprofit corporation unless such action is permitted by the law of the state under which such foreign nonprofit corporation is incorporated. PART 5 DELEGATES Delegates. (1) A nonprofit corporation may provide in its bylaws for delegates having some or all of the authority of members. (2) The bylaws may state provisions relating to: (a) The characteristics, qualifications, rights, limitations, and obligations of delegates, including their selection and removal; (b) Calling, noticing, holding, and conducting meetings of delegates; and (c) Carrying on corporate activities during and between meetings of delegates. ARTICLE 127 Members' Meetings and Voting PART 1 MEETINGS Annual and regular meetings. (1) Unless the bylaws eliminate the requirement for holding an annual meeting, a nonprofit corporation that has voting members shall hold a meeting of the voting members annually at a time stated in or fixed in accordance with the bylaws, or, if not so fixed, at a time and date stated in or fixed in accordance with a resolution of the board of directors. (2) A nonprofit corporation with members may hold regular membership meetings at a time and date stated in or fixed in accordance with the bylaws, or, if not so fixed, at a time and date stated in or fixed in accordance with a resolution of the board of directors. (3) Annual and regular membership meetings may be held in or out of this state at the place stated in or fixed in accordance with the bylaws, or, if not so stated or fixed, at a place stated or fixed in accordance with a resolution of the board of directors. If no place is so stated or fixed, annual and regular meetings shall be held at the nonprofit corporation's principal office. (4) The failure to hold an annual or regular meeting at the time and date determined pursuant to subsection (1) of this section does not affect the validity of any corporate action and does not work a forfeiture or dissolution of the nonprofit corporation Special meeting. (1) A nonprofit corporation shall hold a special meeting of its members: (a) On call of its board of directors or the person or persons authorized by the bylaws or resolution of the board of directors to call such a meeting; or -16-

17 (b) Unless otherwise provided by the bylaws, if the nonprofit corporation receives one or more written demands for the meeting, stating the purpose or purposes for which it is to be held, signed and dated by members holding at least ten percent of all the votes entitled pursuant to the bylaws to be cast on any issue proposed to be considered at the meeting. (2) If not otherwise fixed under section or , the record date for determining the members entitled to demand a special meeting pursuant to paragraph (b) of subsection (1) of this section is the date of the earliest of any of the demands pursuant to which the meeting is called, or the date that is sixty days before the date the first of such demands is received by the nonprofit corporation, whichever is later. (3) If a notice for a special meeting demanded pursuant to paragraph (b) of subsection (1) of this section is not given pursuant to section within thirty days after the date the written demand or demands are delivered to a corporate officer, regardless of the requirements of subsection (4) of this section, a person signing the demand or demands may set the time and place of the meeting and give notice pursuant to section (4) Special meetings of the members may be held in or out of this state at the place stated in or fixed in accordance with the bylaws, or, if not so stated or fixed, at a place stated or fixed in accordance with a resolution of the board of directors. If no place is so stated or fixed, special meetings shall be held at the nonprofit corporation's principal office. (5) Unless otherwise provided by the bylaws, only business within the purpose or purposes described in the notice of the meeting required by section (3) may be conducted at a special meeting of the members Court-ordered meeting. (1) The holding of a meeting of the members may be summarily ordered by the district court for the county in this state in which the street address of the nonprofit corporation's principal office is located or, if the nonprofit corporation has no principal office in this state, by the district court for the county in which the street address of its registered agent is located or, if the nonprofit corporation has no registered agent, by the district court for the city and county of Denver: (a) On application of any voting member entitled to participate in an annual meeting if an annual meeting was required to be held and was not held within the earlier of six months after the close of the nonprofit corporation's most recently ended fiscal year or fifteen months after its last annual meeting; or (b) On application of any person who participated in a call of or demand for a special meeting effective under section (1), if: (I) Notice of the special meeting was not given within thirty days after the date of the call or the date the last of the demands necessary to require the calling of the meeting was received by the nonprofit corporation pursuant to section (1) (b), as the case may be; or (II) The special meeting was not held in accordance with the notice. -17-

18 (2) The court may fix the time and place of the meeting, determine the members entitled to participate in the meeting, fix a record date for determining members entitled to notice of and to vote at the meeting, prescribe the form and content of the notice of the meeting, fix the quorum required for specific matters to be considered at the meeting or direct that the votes represented at the meeting constitute a quorum for action on those matters, and enter other orders necessary or appropriate to accomplish the holding of the meeting Notice of meeting. (1) A nonprofit corporation shall give to each member entitled to vote at the meeting notice consistent with its bylaws of meetings of members in a fair and reasonable manner. (2) Any notice that conforms to the requirements of subsection (3) of this section is fair and reasonable, but other means of giving notice may also be fair and reasonable when all the circumstances are considered. (3) Notice is fair and reasonable if: (a) The nonprofit corporation notifies its members of the place, date, and time of each annual, regular, and special meeting of members no fewer than ten days, or if notice is mailed by other than first class or registered mail, no fewer than thirty days, nor more than sixty days before the meeting date, and if notice is given by newspaper as provided in section (2), the notice must be published five separate times with the first such publication no more than sixty days, and the last such publication no fewer than ten days, before the meeting date. (b) Notice of an annual or regular meeting includes a description of any matter or matters that must be approved by the members or for which the members' approval is sought under sections , , , , , , and ; and (c) Unless otherwise provided by articles 121 to 137 of this title or the bylaws, notice of a special meeting includes a description of the purpose or purposes for which the meeting is called. (4) Unless otherwise provided by the bylaws, if an annual, regular, or special meeting of members is adjourned to a different date, time, or place, notice need not be given of the new date, time, or place, if the new date, time, or place is announced at the meeting before adjournment. If a new record date for the adjourned meeting is or must be fixed under section , however, notice of the adjourned meeting must be given under this section to the members of record as of the new record date. (5) When giving notice of an annual, regular, or special meeting of members, a nonprofit corporation shall give notice of a matter a member intends to raise at the meeting if: (a) Requested in writing to do so by a person entitled to call a special meeting; and (b) The request is received by the secretary or president of the nonprofit corporation at least ten days before the nonprofit corporation gives notice of the meeting Waiver of notice. (1) A member may waive any notice required by articles 121 to 137 of this title or by the bylaws, whether before or after the date or time -18-

19 stated in the notice as the date or time when any action will occur or has occurred. The waiver shall be in writing, be signed by the member entitled to the notice, and be delivered to the nonprofit corporation for inclusion in the minutes or filing with the corporate records, but such delivery and filing shall not be conditions of the effectiveness of the waiver. (2) A member's attendance at a meeting: (a) Waives objection to lack of notice or defective notice of the meeting, unless the member at the beginning of the meeting objects to holding the meeting or transacting business at the meeting because of lack of notice or defective notice; and (b) Waives objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the member objects to considering the matter when it is presented Record date - determining members entitled to notice and vote. (1) The bylaws may fix or provide the manner of fixing a date as the record date for determining the members entitled to notice of a members' meeting. If the bylaws do not fix or provide for fixing such a record date, the board of directors may fix a future date as such a record date. If no such record date is fixed, members at the close of business on the business day preceding the day on which notice is given, or, if notice is waived, at the close of business on the business day preceding the day on which the meeting is held are entitled to notice of the meeting. (2) The bylaws may fix or provide the manner of fixing a date as the record date for determining the members entitled to vote at a members' meeting. If the bylaws do not fix or provide for fixing such a record date, the board may fix a future date as such a record date. If no such record date is fixed, members on the date of the meeting who are otherwise eligible to vote are entitled to vote at the meeting. (3) The bylaws may fix or provide the manner for determining a date as the record date for the purpose of determining the members entitled to exercise any rights in respect of any other lawful action. If the bylaws do not fix or provide for fixing such a record date, the board may fix a future date as the record date. If no such record date is fixed, members at the close of business on the day on which the board adopts the resolution relating thereto, or the sixtieth day prior to the date of such other action, whichever is later, are entitled to exercise such rights. (4) A record date fixed under this section may not be more than seventy days before the meeting or action requiring a determination of members occurs. (5) A determination of members entitled to notice of or to vote at a meeting of members is effective for any adjournment of the meeting unless the board of directors fixes a new date for determining the right to notice or the right to vote, which it must do if the meeting is adjourned to a date more than one hundred twenty days after the record date for determining members entitled to notice of the original meeting. (6) If a court orders a meeting adjourned to a date more than one hundred twenty days after the date fixed for the original meeting, it may provide that the original record date for notice or voting continues in effect or it may fix a new record date for notice or -19-

20 voting Action without meeting. (1) Unless otherwise provided by the bylaws, any action required or permitted by articles 121 to 137 of this title to be taken at a members' meeting may be taken without a meeting if members entitled to vote thereon unanimously agree and consent to such action in writing. (2) No action taken pursuant to this section shall be effective unless writings describing and consenting to the action, signed by members sufficient under subsection (1) of this section to take the action and not revoked pursuant to subsection (3) of this section, are received by the nonprofit corporation within sixty days after the date the earliest dated writing describing and consenting to the action is received by the nonprofit corporation. Unless otherwise provided by the bylaws, any such writing may be received by the nonprofit corporation by electronically transmitted facsimile or other form of wire or wireless communication providing the nonprofit corporation with a complete copy thereof, including a copy of the signature thereto. Action taken pursuant to this section shall be effective when the last writing necessary to effect the action is received by the nonprofit corporation, unless the writings describing and consenting to the action state a different effective date. (3) Any member who has signed a writing describing and consenting to action taken pursuant to this section may revoke such consent by a writing signed and dated by the member describing the action and stating that the member's prior consent thereto is revoked, if such writing is received by the nonprofit corporation before the last writing necessary to effect the action is received by the nonprofit corporation. (4) Subject to subsection (8) of this section, the record date for determining members entitled to take action without a meeting or entitled to be given notice under subsection (7) of this section of action so taken is the date a writing upon which the action is taken pursuant to subsection (1) of this section is first received by the nonprofit corporation. (5) Action taken under this section has the same effect as action taken at a meeting of members and may be described as such in any document. (6) In the event voting members are entitled to vote cumulatively in the election of directors, voting members may take action under this section to elect or remove directors only pursuant to section and only if the required signed writings describing and consenting to the election or removal of the directors are received by the nonprofit corporation. (7) In the event action is taken under subsection (1) of this section with less than unanimous consent of all members entitled to vote upon the action, the nonprofit corporation or the members taking the action shall, promptly after all of the writings necessary to effect the action have been received by the nonprofit corporation, give notice of such action to all members who were entitled to vote upon the action. The notice shall contain or be accompanied by the same material, if any, that under articles 121 to 137 of this title would have been required to be given to members in or with a notice of the meeting at which the action would have been submitted to the members for action. -20-